105TH CONGRESS REPORT

" HOUSE OF REPRESENTATIVES

1st Session 105–224
!

REAUTHORIZATION OF THE EXPORT-IMPORT BANK

JULY 31, 1997.—Committed to the Committee of the Whole House on the State of
the Union and ordered to be printed

Mr. LEACH, from the Committee on Banking and Financial

Services, submitted the following

R E P O R T
together with

ADDITIONAL AND SUPPLEMENTAL VIEWS

[To accompany H.R. 1370]

[Including cost estimate of the Congressional Budget Office]

The Committee on Banking and Financial Services, to whom was

referred the bill (H.R. 1370) to reauthorize the Export-Import Bank
of the United States, having considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu thereof
the following:
SECTION 1. EXTENSION OF AUTHORITY.
Section 7 of the Export-Import Bank Act of 1945 (12 U.S.C. 635f) is amended by
striking ‘‘1997’’ and inserting ‘‘2001’’.
SEC. 2. TIED AID CREDIT FUND AUTHORITY.
(a) Section 10(c)(2) of the Export-Import Bank Act of 1945 (12 U.S.C. 635i–3(c)(2))
is amended by striking ‘‘through September 30, 1997’’.
(b) Section 10(e) of such Act (12 U.S.C. 635i–3(e)) is amended by striking the first
sentence and inserting the following: ‘‘There are authorized to be appropriated to
the Fund such sums as may be necessary to carry out the purposes of this section.’’.
SEC. 3. EXTENSION OF AUTHORITY TO PROVIDE FINANCING FOR THE EXPORT OF NON-
LETHAL DEFENSE ARTICLES OR SERVICES THE PRIMARY END USE OF WHICH
WILL BE FOR CIVILIAN PURPOSES.
Section 1(c) of Public Law 103–428 (12 U.S.C. 635 note; 108 Stat. 4376) is amend-
ed by striking ‘‘1997’’ and inserting ‘‘2001’’.

39–006
 2
SEC. 4. CLARIFICATION OF PROCEDURES FOR DENYING CREDIT BASED ON THE NATIONAL
INTEREST.
Section 2(b)(1)(B) of the Export-Import Bank Act of 1945 (12 U.S.C. 635(b)(1)(B))
is amended—
(1) in the last sentence, by inserting ‘‘, after consultation with the Committee
on Banking and Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate,’’ after ‘‘Presi-
dent’’; and
(2) by adding at the end the following: ‘‘Each such determination shall be de-
livered in writing to the President of the Bank, shall state that the determina-
tion is made pursuant to this section, and shall specify the applications or cat-
egories of applications for credit which should be denied by the Bank in further-
ance of the national interest.’’.
SEC. 5. ADMINISTRATIVE COUNSEL.
Section 3(e) of the Export-Import Bank Act of 1945 (12 U.S.C. 635a(e)) is amend-
ed—
(1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and
(2) by adding at the end the following:
‘‘(2) The General Counsel of the Bank shall ensure that the directors, officers, and
employees of the Bank have available appropriate legal counsel for advice on, and
oversight of, issues relating to ethics, conflicts of interest, personnel matters, and
other administrative law matters by designating an attorney to serve as Assistant
General Counsel for Administration, whose duties, under the supervision of the
General Counsel, shall be concerned solely or primarily with such issues.’’.
SEC. 6. ADVISORY COMMITTEE FOR SUB-SAHARAN AFRICA.
(a) IN GENERAL.—Section 2(b) of the Export-Import Bank Act of 1945 (12 U.S.C.
635(b)) is amended by inserting after paragraph (8) the following:
‘‘(9)(A) The Board of Directors of the Bank shall take prompt measures, consistent
with the credit standards otherwise required by law, to promote the expansion of
the Bank’s financial commitments in sub-Saharan Africa under the loan, guarantee,
and insurance programs of the Bank.
‘‘(B)(i) The Board of Directors shall establish and use an advisory committee to
advise the Board of Directors on the development and implementation of policies
and programs designed to support the expansion described in subparagraph (A).
‘‘(ii) The advisory committee shall make recommendations to the Board of Direc-
tors on how the Bank can facilitate greater support by United States commercial
banks for trade with sub-Saharan Africa.
‘‘(iii) The advisory committee shall terminate 4 years after the date of the enact-
ment of this subparagraph.’’.
(b) REPORTS TO THE CONGRESS.—Within 6 months after the date of the enactment
of this Act, and annually for each of the 4 years thereafter, the Board of Directors
of the Export-Import Bank of the United States submit to the Congress a report on
the steps that the Board has taken to implement section 2(b)(9)(B) of the Export-
Import Bank Act of 1945 and any recommendations of the advisory committee estab-
lished pursuant to such section.
SEC. 7. INCREASE IN LABOR REPRESENTATION ON THE ADVISORY COMMITTEE OF THE EX-
PORT-IMPORT BANK.
Section 3(d)(2) of the Export-Import Bank Act of 1945 (12 U.S.C. 635a(d)(2)) is
amended—
(1) by inserting ‘‘(A)’’ after ‘‘(2)’’; and
(2) by adding after and below the end the following:
‘‘(B) Not less than 2 members appointed to the Advisory Committee shall be rep-
resentative of the labor community.’’.
SEC. 8. OUTREACH TO COMPANIES.
Section 2(b)(1) of the Export-Import Bank Act of 1945 (12 U.S.C. 635(b)(1)) is
amended by adding at the end the following:
‘‘(I) The Chairman of the Bank shall design and implement a program to provide
information about Bank programs to companies which have not participated in
Bank programs. Not later than 1 year after the date of the enactment of this sub-
paragraph, the Chairman of the Bank shall submit to the Congress a report on the
activities undertaken pursuant to this subparagraph.’’.
 3
SEC. 9. FIRMS THAT HAVE SHOWN A COMMITMENT TO REINVESTMENT AND JOB CREATION
IN THE UNITED STATES TO BE GIVEN PREFERENCE IN FINANCIAL ASSISTANCE DE-
TERMINATIONS.
Section 2(b)(1) of the Export-Import Bank Act of 1945 (12 U.S.C. 635(b)(1)), as
amended by section 8 of this Act, is amended by adding at the end the following:
‘‘(J) The Board of Directors of the Bank shall prescribe such regulations and the
Bank shall implement such procedures as may be appropriate to ensure that, in se-
lecting from among firms to which to provide financial assistance, preference be
given to any firm that has shown a commitment to reinvestment and job creation
in the United States.’’.

EXPLANATION OF THE LEGISLATION

H.R. 1370 provides for the following: (1) a four-year renewal of
the charter for the Export-Import Bank of the United States
through September 30, 2001; (2) an extension of the tied aid credit
fund authority; (3) an extension of the authority for providing fi-
nancing for the export of nonlethal defense articles; (4) a clarifica-
tion of the President’s authority to prevent Bank financing based
on national interest concerns; (5) the creation of an Assistant Gen-
eral Counsel for Administration position; (6) authorization for the
establishment of an Advisory Committee to assist the Bank in fa-
cilitating U.S. exports to sub-Saharan Africa; (7) a requirement
that two labor representatives be appointed to the Bank’s existing
Advisory Committee; (8) a requirement that the Bank’s Chairman
design and implement a program to increase awareness of its pro-
grams among companies that have not previously utilized the
Bank’s services; and (9) the establishment of regulations and proce-
dures, as appropriate, to ensure that when the Bank is making a
determination as among firms to receive assistance that preference
be given those firms that have shown a commitment to reinvest-
ment and job creation in the United States.
BACKGROUND AND NEED FOR LEGISLATION
The bill as reported reauthorizes the charter of the Export-Im-
port Bank of the United States (Eximbank or the Bank) through
the close of business on September 30, 2001. Without reauthoriza-
tion, Eximbank’s charter will expire at the end of fiscal year 1997.
Eximbank is an independent federal agency established to pro-
vide export financing for U.S. businesses. The Bank has a dual pur-
pose: to neutralize aggressive financing by foreign export credit
agencies, and to furnish prudent export credit financing when pri-
vate financing is unavailable. It does this through a variety of loan,
guarantee, and insurance programs. Since its founding, Eximbank
has supported more than $300 billion in U.S. exports, almost $100
billion in this decade alone. The Bank currently supports about $15
billion in U.S. exports annually.
The Committee believes that there is a continuing need for the
services that Eximbank is uniquely positioned to provide, and that
it is crucial to maintain a strong U.S. export credit agency in the
competitive world of international trade finance.
Export growth is playing an increasingly significant role in over-
all U.S. economic performance. For example, from 1985–1996, U.S.
export growth accounted for about 30% of gross domestic product
(GDP) growth. Most of the exports financed by the Bank are for
capital equipment for the rapidly developing economies in Asia,
 4

Latin America, Eastern Europe, and the former Soviet Union. The
Committee notes that in recent years overall economic growth in
the developing world has averaged more than 5% annually, about
twice the rate of the advanced industrial economies. The Depart-
ment of Commerce predicts that U.S. exports to the developing
world could quadruple between now and the year 2010. Given the
potential size and intense competitiveness of capital goods markets
in the developing world, the Committee believes that failure to re-
authorize the Bank would put U.S. exporters at a severe competi-
tive disadvantage.
In this regard, Eximbank has been an important instrument in
Congressional efforts to reduce the trade-distorting activities of for-
eign export credit agencies (ECAs). The Bank, together with the
Treasury Department, has led U.S. efforts in the Organization for
Economic Cooperation and Development (OECD) to reach agree-
ments limiting subsidies by developed country ECAs. Eximbank
has also used its tied aid credit fund authority (the ‘‘tied aid war
chest’’) to counter the tied aid offers of foreign governments. Due
to Eximbank’s efforts to discipline tied aid, the use of this trade-
distorting technique by foreign governments has declined by 75%
since 1991.
The Committee notes that the General Accounting Office (GAO)
recently concluded that the most compelling reasons for reauthoriz-
ing Eximbank are that it helps to ‘‘level the international playing
field’’ for U.S. exporters and provides leverage in trade policy nego-
tiations to induce foreign governments to reduce and ultimately
eliminate such subsidies. In serving this function, however, the
Bank does not compete with the private sector. According to GAO,
‘‘unlike Eximbank, other ECAs appear to compete to varying de-
grees with private sources of export financing. They do not aim to
function exclusively as ‘lenders of last resort,’ as the Eximbank
strives to do. Eximbank aims to complement and not compete with
private sources of capital.’’
Although Congress has mandated that the Bank complement the
market and not compete with the private sector, other well-sup-
ported ECAs are not similarly constrained in their operations.
Without the Bank to bring more discipline to international trade fi-
nance, the U.S. would have no leverage in international negotia-
tions to further reduce or eliminate all forms of export credit sub-
sidies. Without Eximbank, international trade would become more
distorted, and U.S. businesses and workers would suffer as a re-
sult.
While the Committee strongly supports an international trading
environment in which purchase decisions are made solely on the
basis of market factors like price, quality, and service, this world
does not yet exist. Indeed, our industrialized trade competitors ac-
count for a far larger share of total G–7 ECA activity and ECA-sup-
ported exports than the United States. The statistics speak for
themselves. In 1994, Japan and France together accounted for 77%
of total G–7 ECA activity. As a percentage of exports, ECA financ-
ing accounts for 32% of Japanese and 18% of French exports, com-
pared with 2% for the United States. Japan and France devote a
substantial 6.4% and 4.3% of GDP, respectively, to export assist-
ance. This compares with just 0.22% for the United States.
 5

Congress has mandated that 10% of Eximbank’s financing be di-

rected to small business. This target has been exceeded in recent
years. During 1996, 21% of the Bank’s financing and about 81% of
all its transactions were with small businesses. During 1996,
Eximbank extended nearly $378 million in guarantees under its
Working Capital Guarantee Program to help make available re-
volving lines of credit used by small- and medium-sized exporters.
The Bank continues to improve its outreach to small business
through its City/State Program which consists of partnerships with
state and local organizations and through its Delegated Authority
Program where lenders in over twenty states have the authority to
make commitments on behalf of the Bank.
In providing financing to small business and other U.S. export-
ers, Eximbank has prudently managed its portfolio. Since 1980
losses have been less than $2.5 billion on $125 billion worth of
loans. This is equivalent to a loan loss ratio of about 1.9%. The
loan loss ratio of commercial banks loans to foreign governments
during this same time frame has been about 6%. The Bank is also
well reserved against contingent liabilities under its guarantee and
insurance policies. These reserves are funded on a continuing basis
by user fees and risk-based premiums paid by U.S. exporters. The
Bank has established loss reserves totaling $3.8 billion, which
should be sufficient to cover potential losses on its $44 billion of
contingent liabilities, given current economic conditions and contin-
ued maintenance of the Bank’s high credit standards.
Eximbank is not self-financing. It requires annual appropriations
both for its administrative expenses and its program budget. The
program budget for Eximbank, called a ‘‘credit subsidy’’ under the
terms of the 1990 Federal Credit Reform Act (designed to more ac-
curately measure the costs of cash and credit transactions for the
purpose of budgeting and analysis), provides the source for the
Bank’s export financing loans, loan guarantees, and export credit
insurance. From the perspective of a financial institution, the
Bank’s credit subsidy is most closely analogous to a loan loss re-
serve. For example, for fiscal 1996 Eximbank’s financial statements
for its entire loan, guarantee and insurance portfolio showed a
‘‘profit’’ of about $1.24 billion. The ‘‘profit’’ figure is made up of
three elements: (1) net interest income of $401 million; (2) a reduc-
tion in the Provision for Credit losses of $665 million; and (3) net
non-interest income of $174.1 million. However, under Credit Re-
form budgeting, each year the Bank must seek an appropriation to
cover all losses which may be incurred on new business committed
that year. This appropriation acts as a reserve, and unused
amounts will be returned to the Treasury in the future when the
loans and guarantees are repaid.
Unanticipated demand for Eximbank’s services in high-risk de-
veloping markets, most particularly Russia and the Newly Inde-
pendent States (NIS), has placed a significant strain on its current
year and fiscal year 1998 program budget. Given the magnitude of
the shortfall, the Committee supports efforts to remedy this prob-
lem in the appropriations process. The Committee also supports al-
lowing Eximbank to borrow budget authority from its tied aid war
chest to bridge the immediate shortfall, provided that the Bank
consults closely with the Committee regarding the pace and scope
 6

of the draw down to ensure that the capacity of the Bank to deter
foreign tied aid offers is not compromised. For fiscal year 1998, the
Bank has proposed a number of policy changes to reduce demand
on its subsidy appropriation. The Committee urges the Bank to
continue close consultations with the exporting community and
Congress regarding its funding options.
In this context, the Committee is aware that Eximbank activity
in Russia and the NIS has occasionally been the focus of criticism.
At the core of this criticism is the policy presumption that
Eximbank should operate as a foreign policy agency. Critics sug-
gest, for example, that Eximbank should not be supporting U.S. ex-
ports to Russia and the NIS when the buyer may be a state-owned
enterprise. By financing such transactions, critics contend,
Eximbank is operating at cross purposes to broader American for-
eign policy objectives. While the issue is a serious one, the Commit-
tee believes much of this criticism is misplaced. In Russia until
very recently, economic, legal, and political conditions compelled
the Bank to operate almost exclusively on a sovereign risk basis.
It operates exclusively on a sovereign risk basis—that is, requiring
a government guarantee—elsewhere in the NIS. It has done so be-
cause in order to protect the taxpayer against losses, Congress re-
quires that Eximbank’s borrowers must offer a reasonable assur-
ance of repayment.
As economic reforms gather speed, and as the financial services
sectors in Russia and the NIS begin to develop true commercial
banks with the objectives and skills to make commercial loans,
Eximbank can accelerate its efforts to deal with the private sector
without relying on government guarantees. The Committee points
out with respect to Eximbank-financed transactions with Russian
state enterprises that in absence of the Bank’s participation, the
U.S. exporter would not have received the contract because the pri-
vate sector cannot provide financing or would do so only on less fa-
vorable terms. The sales would have likely gone to a European firm
instead. Further, it appears that international financial institutions
offer a far better mechanism for promoting structural reforms in
Russia and the NIS than do trade finance agencies.
As amended, this legislation contains several provisions not in
the Administration’s original request.
First, the Committee amended the so-called ‘‘Chafee Amend-
ment’’ under which the President of the United States may make
a determination that it is in the national interest that the Bank
not take final action with respect to a particular transaction. In
practice, this determination has been delegated to the Secretary of
State. The new language clarifies and makes more transparent the
procedures under which the President may invoke the authority
provided by the Chafee Amendment. It simply requires that before
the President or his designee makes a determination that it is in
the national interest for the Bank to deny credit, there must be
consultation with the House and Senate Banking Committees, and
once a determination is reached, a written document containing
that determination must be delivered to the President of the Bank
specifically citing the legal authority and policy rationale for deny-
ing a final transaction by the Bank.
 7

The Committee has considered the Department of State’s con-

cerns regarding the practical implications of the ‘‘consultation’’ re-
quirement on the Department’s ability to effectively invoke the
Chafee Amendment. The Committee recognizes that facts and cir-
cumstances surrounding a decision to invoke the Chafee Amend-
ment may require quick action. Accordingly, the bill does not speci-
fy the scope, length or nature of the consultations. The Committee
recognizes that consultations may consist of a notification to the
Committee and an opportunity for quick Committee reaction. The
Committee does not expect this consultation requirement to inter-
fere with the Secretary of State’s decision-making process, but
rather as a method of providing the Committee with prior knowl-
edge of any action to be taken under Chafee and an opportunity to
provide comment to State.
Second, the Committee created the position of Assistant General
Counsel for Administration within the Bank. This provision is in-
tended to help the new management of the Bank ensure that cer-
tain recent management problems such as the past abuse of reten-
tion allowances and other issues are put behind the agency and the
Bank upholds at all times the highest ethical and professional
standards.
Third, consistent with the Bank’s existing credit standards, an
Advisory Committee was established for promoting the Bank’s com-
mitments in sub-Saharan Africa. The Advisory Committee is to ad-
vise the Board of Directors on the development and implementation
of policies and programs to enhance support for the expansion of
loans, guarantees, and insurance to the sub-Saharan Africa region.
The Advisory Committee is set to terminate four years after the
date of enactment.
The Advisory Committee shall meet at least twice per year and
submit a written report to the Board of Directors containing their
suggestions on improvements in the provision of loans, guarantees,
and insurance with respect to sub-Saharan Africa. It shall consist
of five members who shall be appointed by the Board of Directors
on the recommendation of the President of the Bank. Such mem-
bers shall be broadly representative of trade finance, commerce,
and banking. Not less than one member appointed to the Advisory
Committee shall be representative of the small business commu-
nity.
This provision regarding sub-Saharan Africa trade and develop-
ment initiatives has bipartisan support. With Africa presently ac-
counting for only a small percent of Eximbank’s transactions, the
Bank sees Africa as a new frontier for its services. One of the
means of developing a stronger economic partnership with reform-
minded sub-Saharan African countries is trade finance and private
sector development utilizing the resources of Eximbank.
The Committee wishes to make clear that it does not intend to
alter the Bank’s basic mission as a consequence of the establish-
ment of this Advisory Committee. The Committee does not intend
for the Bank to assume a foreign policy or foreign assistance func-
tion. Rather, it is the Committee’s strong expectation that
Eximbank will remain ‘‘deal driven’’ and respond to the needs of
exporters on a case-by-case basis.
 8

Fourth, the Committee required that the Bank include on its ex-
isting Advisory Committee not less than two representatives from
the labor community. The Advisory Committee positions are filled
on a year to year basis, and as such, the next available opening
would be filled by a labor community representative. Given that
the Bank benefits both businesses and workers, the Committee be-
lieves it entirely appropriate to increase labor’s representation on
Eximbank’s Advisory Committee. As much of the Bank’s operating
policy is not set by statute, it is important that American workers
have adequate ability to advise the Bank on policy matters. Other-
wise, current statutory requirements regarding positions on the Ex-
port-Import Bank’s Advisory Committee, including the requirement
of three members to represent small business, remains unchanged.
Fifth, the Committee directed the Bank to design an outreach
program specifically targeted to reach those companies that have
never used the Bank’s services. The Committee further directed the
Bank to implement the program within one year, and looks forward
to consultation with Eximbank on ways to increase the number of
small and medium size businesses familiar with the programs of
the Bank.
Sixth, the Committee required Eximbank to prescribe regulations
and procedures, as appropriate, to ensure that in selecting among
firms to provide financial assistance, preference be given to any
firm that has shown a commitment to job creation and reinvest-
ment in the United States. This amendment reflects the concern of
a majority of the Committee that because the purpose of Eximbank
is to support U.S. jobs through exports, the Bank should give pref-
erence to corporations which reinvest and support jobs in the Unit-
ed States. The Committee expects to remain in close consultations
with the Bank regarding this provision, recognizing that Congress
has otherwise directed the Bank to efficiently follow market de-
mand, consider applications in the order they are received, make
timely and market-sensitive judgments on the basis of the credit-
worthiness of the buyer (not the exporter), as well as the Bank’s
environmental guidelines, and establish a reasonable assurance of
repayment for every transaction.
Several Members of the Committee have also raised concerns
about potential adverse impacts of Eximbank financing on U.S. in-
dustry. Currently, before it takes final action on any transaction,
Eximbank is required to assess whether and to what extent its
loans and guarantees are likely to cause substantial direct injury
to U.S. industry. If Eximbank support would have a net adverse
economic impact on U.S. production and employment then it may
not provide assistance.
The Committee understands that Eximbank has had in place its
current Economic Impact Analysis Procedures (Procedures) since
approximately 1988 with an update in 1992. The Committee be-
lieves that the current Procedures to determine if there is substan-
tial adverse effect on American industries and workers as a result
of Eximbank financing are in need of updating. Realizing that the
world economy is rapidly changing and that new trade relation-
ships have dramatically impacted the global delivery of goods and
services, the Committee directs Eximbank to conduct a full review
 9

of its Economic Impact Analysis Procedures and take action for up-
date pursuant, but not limited to, the Committee’s instructions.
The Committee understands that any change in the current Pro-
cedures must carefully weigh the interests of many diverse parties
and take into account the overall long-term interests of the Amer-
ican worker. In the review of Procedures, the Committee directs
the Bank to recommend and implement measures to improve the
information gathering capability of Eximbank, increase consulta-
tion with American producers of goods and services similar to the
goods and services to be produced as a result of Eximbank financ-
ing (such as giving greater notice to American industries that suf-
fer competitively as a result of unfair trade practices—as noted by
the United States Trade Representative—in the country or region
Eximbank financing will be directed and improving communication
with American companies that are able to demonstrate that an
Eximbank-financed project will have a substantial adverse affect on
their company and workers), protecting proprietary trade secrets of
American exporters, and not diminishing the competitiveness of
American exporters by causing unnecessary delays in the applica-
tion process.
The Committee expects that this review process will take place
in consultation with the Banking Committees. Additionally, the
Committee expects that this review process will take place in con-
sultation with representatives of appropriate federal agencies, pri-
vate corporations, small businesses, and industry groups.
The Committee expects the Bank to report the findings and ac-
tions taken as a result of the review of Procedures to the Banking
Committees no later than May 31, 1998.
In the future, the Committee directs the Bank to conduct a like
review of Procedures and report findings and actions taken to the
Banking Committees at least 90 days prior to the expiration of the
Bank’s charter (as amended from time to time).
HEARINGS
On April 17, 1997, at the request of the Administration, Mr. Mi-
chael N. Castle introduced H.R. 1370, a bill to reauthorize the Ex-
port-Import Bank of the United States.
On April 29, 1997 the Subcommittee on Domestic and Inter-
national Monetary Policy held a hearing on the reauthorization of
the Export-Import Bank. Witnesses were as follows: (1) Dr. Rita M.
Rodriguez, Acting President and Chairman of the Export-Import
Bank of the United States; (2) Ms. Meg Lundsager, Deputy Assist-
ant Secretary, Trade and Investment Policy at the U.S. Treasury;
(3) Mr. Benjamin F. Nelson, Director of International Relations and
Trade Issues of the General Accounting Office; (4) Mr. John H.
Robinson, Jr., Managing Partner at Black & Veatch, representing
the National Foreign Trade Council; (5) Mr. Gary Groom, Vice
President of Project Finance for Raytheon Engineers and Construc-
tors, representing the National Association of Manufacturers and
the Coalition for Exports through Employment; (6) Mr. Peter Bowe,
President of Ellicott Machine Corporation International, represent-
ing the Small Business Exporters Association; (7) Mr. Peter P. Fer-
ris, Executive Vice President and Manager of the World Banking
Group of Norwest Bank Minnesota, N.A.; (8) Mr. Howard D. Sam-
 10

uel, Executive Director of the Labor/Industry Coalition for Inter-

national Trade; and (9) Mr. Peter J. Ferrara, General Counsel and
Chief Economist for Americans for Tax Reform.
COMMITTEE CONSIDERATION AND VOTES
Rule XI, clause 2(l)(2)(B)
On May 8, 1997, the Domestic and International Monetary Policy
Subcommittee of the Banking and Financial Services Committee
met in open session to mark up H.R. 1370.
The Subcommittee considered as original text for purposes of
amendment an amendment in the nature of a substitute from
Chairman Castle. The Castle substitute extended the Export-Im-
port Bank’s charter from September 30, 1997 through September
30, 2001. For the same reauthorization period, the amendment ex-
tended the authority to: (1) obtain reimbursement for tied aid cred-
its; (2) receive appropriations for the Tied Aid Credit Fund; and (3)
delay the termination of amendments that provide financing for the
exportation of nonlethal defense articles or services used for civil-
ian purposes. The amendment also: (1) clarified the procedures for
denying credit based on national interest by requiring that such a
determination be presented to the President of the Export-Import
Bank in writing; (2) provided for an Assistant General Counsel for
Administration to be designated to handle issues relating to ethics,
conflicts of interest, personnel matters and other administrative
law matters; and (3) provided for an Advisory Committee to be es-
tablished to promote the expansion of the Bank’s financial commit-
ments in sub-Saharan Africa. The amendment was adopted by
unanimous consent.
Roll call votes were taken on the following amendments:
Representative Sanders’ Unfiled Amendment 1: This amendment
required the Bank to give preference to firms which, over the last
15 years, had increased rather than decreased, their number of em-
ployees or had shown a demonstrable commitment to job creation
in the United States. It was defeated 5 to 11.
YEAS NAYS
Dr. Paul Mr. Castle
Mr. Sanders Mr. LaTourette
Mr. Hinchey Mr. Lucas
Mr. Jackson, Jr. Mr. Barr
Mr. Torres Dr. Weldon
Mr. Bereuter
Mr. Cook
Mr. Manzullo
Mr. Flake
Mr. Frank
Mr. Bentsen
Representative Sanders’ Unfiled Amendment 2: This amendment
required the Bank to give preference to a firm where the chief exec-
utive officer did not receive compensation that exceeded 40 times
the average compensation provided to nonsupervisory employees of
the firm. It was defeated 3 to 8.
 11
YEAS NAYS
Mr. Ney Mr. Castle
Mr. Sanders Mr. Lucas
Mr. Jackson, Jr. Dr. Weldon
Mrs. Roukema
Mr. Bereuter
Mr. Cook
Mr. Manzullo
Mr. Bentsen
Representative Frank’s Unfiled Amendment 5: This amendment
required a community service commitment for the Board of Direc-
tors of any corporation receiving Bank assistance. This amendment
was defeated 8 to 11.
YEAS NAYS
Mr. Flake Mr. Castle
Mr. Frank Mr. Lucas
Mr. Kennedy Mr. Metcalf
Ms. Velazquez Mr. Ney
Mrs. Maloney Mr. Barr
Mr. Bentsen Dr. Weldon
Mr. Jackson, Jr. Mrs. Roukema
Mr. Gonzalez Mr. Bereuter
Mr. Cook
Mr. Manzullo
Mr. Hinchey
On July 9, 1997, the Committee on Banking and Financial Serv-
ices marked up the amended bill as passed out of subcommittee in
open session, pursuant to notice.
Roll call votes were taken on the following amendments:
Representative Jones’ amendment 1: This amendment provided
that Eximbank may provide up to 90% coverage of the interest and
principal instead of 100% of the 85% maximum that the Bank cur-
rently is allowed to provide for guarantees. It was defeated 8 to 35.
YEAS NAYS
Mr. Campbell Mr. Leach
Mr. Royce Mrs. Roukema
Mr. Ney Mr. Bereuter
Mr. Fox Mr. Baker
Dr. Paul Mr. Bachus
Mr. Foley Mr. Castle
Mr. Jones Mr. Lucas
Mr. Jackson, Jr. Mr. Metcalf
Mr. Ehrlich
Mrs. Kelly
Dr. Weldon
Mr. Ryun
Mr. Cook
Mr. Snowbarger
Mr. Riley
Mr. Hill
Mr. Sessions
Mr. Manzullo
 12

Mr. Gonzalez
Mr. Vento
Mr. Frank
Mr. Kanjorski
Mr. Kennedy
Mr. Flake
Ms. Waters
Mr. Gutierrez
Mrs. Roybal-Allard
Mr. Barrett
Mr. Watt
Mr. Ackerman
Mr. Bentsen
Ms. Kilpatrick
Mr. Maloney
Ms. Hooley
Ms. Carson
Representative Sanders’ amendment 3: This amendment directed
the Eximbank to establish procedures to ensure that, when select-
ing among firms to provide financial assistance, preference be given
to any firm that has shown a commitment to reinvestment and job
creation in the United States. It was accepted 24 to 21.
YEAS NAYS
Mr. Campbell Mr. Leach
Mr. Ney Mr. Bereuter
Dr. Paul Mr. Baker
Mr. Cook Mr. Lazio
Mr. Foley Mr. Bachus
Mr. Gonzalez Mr. Castle
Mr. LaFalce Mr. Royce
Mr. Vento Mr. Lucas
Mr. Kanjorski Mr. Metcalf
Mr. Flake Mr. Ehrlich
Mr. Sanders Mr. Barr
Mrs. Roybal-Allard Mr. Fox
Mr. Barrett Mrs. Kelly
Ms. Velázquez Dr. Weldon
Mr. Watt Mr. Ryun
Mr. Hinchey Mr. Snowbarger
Mr. Ackerman Mr. Riley
Mr. Bentsen Mr. Hill
Mr. Jackson Mr. Sessions
Ms. McKinney Mr. LaTourette
Ms. Kilpatrick Mr. Manzullo
Mr. Maloney
Ms. Hooley
Ms. Carson
Representative Frank’s amendment 5: This amendment would
have instituted a community service work requirement for mem-
bers of Boards of Directors of firms receiving assistance from the
Eximbank. It was defeated 9 to 29.
 13
YEAS NAYS
Mr. Gonzalez Mr. Leach
Mr. Vento Mr. Bereuter
Mr. Frank Mr. Baker
Mr. Kennedy Mr. Lazio
Mr. Sanders Mr. Bachus
Mrs. Roybal-Allard Mr. Castle
Mr. Jackson, Jr. Mr. Campbell
Ms. McKinney Mr. Royce
Ms. Carson Mr. Lucas
Mr. Metcalf
Mr. Ney
Mr. Ehrlich
Mr. Fox
Mrs. Kelly
Dr. Weldon
Mr. Ryun
Mr. Cook
Mr. Snowbarger
Mr. Riley
Mr. Hill
Mr. Sessions
Mr. Manzullo
Mr. Foley
Mr. Jones
Mr. Barrett
Mr. Watt
Mr. Bentsen
Mr. Maloney
Ms. Hooley
With a quorum being present, the Committee by voice vote or-
dered the bill reported to the House with the recommendation that
the bill, as amended, do pass.
COMMITTEE OVERSIGHT FINDINGS
In compliance with clause 1(l)(3)(A) of rule XI of the Rules of the
House of Representatives, the Committee reports the findings and
recommendations of the Committee, based on oversight activities
under clause 2(b)(1) of rule X of the Rules of the House of Rep-
resentatives, are incorporated in the descriptive portions of this re-
port.
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT FINDINGS
No findings or recommendations of the Committee on Govern-
ment Reform and Oversight were received as referred to in clause
2(l)(3)(d) of rule XI of the Rules of the House of Representatives.
CONSTITUTIONAL AUTHORITY
In compliance with clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Constitutional Authority for Con-
gress to enact this legislation is derived from Article I, section 8,
clause 1 (relating to the general welfare of the United States); Arti-
 14

cle I, section 8, clause 3 (relating to Congressional power to regu-

late commerce); and Article I, section 8, clause 18 (relating to mak-
ing all laws necessary and proper for carrying into execution pow-
ers vested by the Constitution in the government of the United
States). In addition, the power to ‘‘coin money’’ and ‘‘regulate the
value thereof’’ provided for in clause 5, Article I, has been broadly
construed to allow for the Federal regulation of the provision of
credit.
NEW BUDGET AUTHORITY AND TAX EXPENDITURES
Clause 2(l)(3)(B) of rule XI of the Rules of the House of Rep-
resentatives is inapplicable because this legislation does not pro-
vide new budgetary authority or increased tax expenditures.
ADVISORY COMMITTEE STATEMENT
An advisory committee within the meaning of Section 5(b) of the
Federal Advisory Committee Act was created to promote the expan-
sion of the Bank’s financial commitments in sub-Saharan Africa.
CONGRESSIONAL ACCOUNTABILITY ACT
The reporting requirement under section 102(b)(3) of the Con-
gressional Accountability Act (P.L. 104–1) is inapplicable because
this legislation does not relate to terms and conditions of employ-
ment or access to public services or accommodations.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATES AND FEDERAL
MANDATE COST ESTIMATE
The cost estimate pursuant to clause 2(l)(3)(c) of rule XI, of the
Rules of the House of Representatives and Section 403 of the Con-
gressional Budget Act of 1974, and the cost estimate pursuant to
Section 424 of the Unfunded Mandates Reform Act (P.L. 104–4) fol-
low below.
JULY 31, 1997.
Hon. JAMES A. LEACH,
Chairman, Committee on Banking and Financial Services, House of
Representatives, Washington, DC.
DEAR MR. CHAIRMAN: The Congressional Budget Office has pre-
pared the enclosed cost estimate for H.R. 1370, a bill to reauthorize
the Export-Import Bank of the United States.
If you wish further details on this estimate, we will be pleased
to provide them. The CBO staff contact is Joseph C. Whitehill.
Sincerely,
JUNE E. O’NEILL, Director.
Enclosure.
Summary: H.R. 1370 would authorize the Export-Import Bank
(Eximbank) to finance exports through 2001. CBO estimates that
enacting the bill would result in additional discretionary spending
of about $80 million in 1998 and $1.2 billion to $1.3 billion over
the 1998–2002 period. H.R. 1370 would not affect direct spending
or receipts; therefore, pay-as-you-go procedures would not apply.
The bill contains no intergovernmental or private-sector mandates
 15

as defined in the Unfunded Mandates Reform Act of 1995 (UMRA),

and would have no impact on the budgets of state, local, or tribal
governments.
Estimated Cost to the Federal Government: H.R. 1370 would ex-
tend through 2001 the Eximbank’s authority to finance exports of
goods and services through loans, guarantees, and highly sub-
sidized tied-aid credits. The bank has a permanent, indefinite au-
thorization for appropriations to cover the cost of its loans and
guarantees, as defined by the Federal Credit Reform Act of 1990.
Because the bill does not authorize specific amounts, funding will
depend on subsequent appropriations actions. The following table
shows estimated spending assuming funding at the 1997 level ad-
justed for inflation and assuming that funding is held at the 1997
level through 2001. The estimate assumes that outlays would fol-
low historical spending patterns.
[By fiscal years, in millions of dollars]

1997 1998 1999 2000 2001 2002

Spending Subject to Appropriation

Spending Under Current Law for the Eximbank:
Estimated authorization level 1 2 ...................................................... 715 ¥1 6 12 17 21
Estimated outlays ............................................................................. 463 437 361 296 234 151
Assuming Funding at the 1997 Level Adjusted for Inflation
Proposed Changes:
Estimated authorization level ........................................................... .......... 743 757 774 792 ¥15
Estimated outlays ............................................................................. .......... 82 195 291 383 378
Spending Under the Bill for the Eximbank:
Estimated authorization level ........................................................... 715 742 763 786 809 6
Estimated Outlay .............................................................................. 463 519 556 587 617 529
Assuming Funding at the 1997 Level
Proposed Changes:
Estimated authorization level ........................................................... .......... 723 716 710 705 ¥22
Estimated outlays ............................................................................. .......... 78 185 271 351 344
Spending Under the Bill for the Eximbank:
Estimated authorization level 1 ......................................................... 715 722 722 722 722 ¥1
Estimated outlays ............................................................................. 463 516 547 568 586 496
1 The 1997 level is the amount appropriated for that year.
2 The estimated authorization for 1998 through 2002 under current law represents the net impact of the permanent, indefinite authorization
for administrative expenses and estimated negative subsidy receipts from credit extended prior to 1998.

The costs of this legislation would fall within budget function 150
(international affairs).
Pay-as-you-go considerations: None.
Intergovernmental and private-sector impact: H.R. 1370 contains
no intergovernmental or private-sector mandates as defined in
UMRA, and would have no impact on the budgets on state, local,
or tribal governments.
Estimate prepared by: Federal Cost: Joseph C. Whitehill. Impact
on State, Local, and Tribal Governments: Pepper Santalucia. Im-
pact on the Private Sector: Lesley Frymier.
Estimate approved by: Robert A. Sunshine, Deputy Assistant Di-
rector for Budget Analysis.
SECTION-BY-SECTION ANALYSIS
Section 1. Extension of Authority
Section 2. Tied Aid Credit Fund Authority
 16

Section 3. Extension of Authority to Provide Financing for the Ex-

port of Nonlethal Defense Articles or Services the Primary
End Use of which will be for Civilian Purposes
Section 4. Clarification of Procedures for Denying Credit Based on
the National Interest
Section 5. Administrative Counsel
Section 6. Advisory Committee for Sub-Saharan Africa
Section 7. Increase in Labor Representatives on the Advisory
Committee of the Export-Import Bank
Section 8. Outreach to Companies
Section 9. Firms that have Shown a Commitment to Reinvest-
ment and Job Creation in the U.S. to be Given Preference in
Financial Assistance Determinations
Section 1. Extension of authority
This section allows the Export-Import Bank of the United States
(the Bank) to continue to exercise its functions in connection with
in furtherance of its objects and purposes until the close of business
on September 30, 2001.
Section 2. Tied aid credit fund authority
Section 2(a) extends the time by which the Bank would be reim-
bursed for tied aid credits authorized by the Bank through Septem-
ber 30, 2001.
Section 2(b) authorizes to be appropriated to the Tied Aid Credit
Fund such sums as may be necessary to carry out the purposes of
section 10 of the Act.
Section 3. Extension of authority to provide financing for the export
of nonlethal defense articles or services the primary end use of
which will be for civilian purposes
This section delays the termination of the amendments made by
Section 1 of Public Law 103–428 until September 30, 2001.
Section 4. Clarification of procedures for denying credit based on
the national interest
Section 4(1) requires the President of the United States to con-
sult with the Committee on Banking and Financial Services of the
House of Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate before making a determination
that the Bank should deny applications for credit for nonfinancial
or noncommercial considerations where denial would clearly and
importantly advance the United States policy in such areas as
international terrorism, nuclear proliferation, environmental pro-
tection and human rights.
Section 4(2) requires that the President of the United States de-
liver in writing to the President of the Bank, his determination
that the Bank should deny applications for credit in furtherance of
the national interest and that the writing specify the applications
or categories of applications for credit which should be denied by
the Bank.
 17

Section 5. Administrative counsel

Section 5(1) designates an attorney to serve as Assistant General
Counsel for Administration under the supervision of the General
Counsel of the Bank whose duties shall be concerned solely or pri-
marily with ensuring that the directors, officers, and employees of
the Bank have available appropriate legal counsel for advice on,
and oversight of, issues relating to ethics, conflicts of interest, per-
sonnel matters, and other administrative law matters.
Section 6. Advisory Committee for sub-Saharan Africa
Section (a) requires that the Board of Directors of the Bank is
to take prompt measures, consistent with the credit standards re-
quired by law, to promote the Bank’s financial commitments in
sub-Saharan Africa by establishing an Advisory Committee. It also
creates section 2(b)(9)(B) under the Act to form an Advisory Com-
mittee that shall advise the Board of Directors on the development
and implementation of policies and programs to support its expan-
sion into sub-Saharan Africa. The Advisory Committee shall make
recommendations to the Bank’s Board on how it can facilitate
greater support by the U.S. commercial banks for trade with sub-
Saharan Africa. The Advisory Committee shall terminate 4 years
after the date of enactment.
Section(b) requires that within 6 months after the date of enact-
ment of this Act, and annually for each of the 4 years thereafter
that the Board of Directors of the Bank submit to Congress a re-
port on the steps that the Board of Directors has taken to imple-
ment section 2(b)(9)(B) of the Act in sub-Saharan Africa and any
recommendations of the Advisory Committee.
Section 7. Increase in labor representatives on the Advisory Commit-
tee of the Export-Import Bank
Requires that not less than two members be appointed to the Ad-
visory Committee of the Bank to represent labor.
Section 8. Outreach to companies
Under this section the Chairman of the Bank is to design and
implement a program for the Bank that will provide information
about its programs to companies which have not participated and
to expand its outreach program to increase the awareness of U.S.
businesses to the benefits of Eximbank’s services. The Chairman is
also required to submit to Congress a report on the activities taken
under this program within one year of enactment.
Section 9. Firms that have shown a commitment to reinvestment
and job creation in the United States to be given preference in
financial assistance determinations
Under section 9, the Board of Directors of the Bank shall pre-
scribe such regulations and the Bank shall implement such proce-
dures as may be appropriate to ensure that, in selecting among
firms to which to provide financial assistance, preference be given
to any firm that has shown a commitment to reinvestment and job
creation in the United States.
 18

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3 of rule XIII of the Rules of the House
of Representatives, changes in existing law made by the bill, as re-
ported, are shown as follows (existing law proposed to be omitted
is enclosed in black brackets, new matter is printed in italic, exist-
ing law in which no change is proposed is shown in roman):
EXPORT-IMPORT BANK ACT OF 1945
* * * * * * *
SEC. 2. (a) * * *
* * * * * * *
(b)(1)(A) * * *
(B) It is further the policy of the United States that loans made
by the Bank in all its programs shall bear interest at rates deter-
mined by the Board of Directors, consistent with the Bank’s man-
date to support United States exports at rates and on terms and
conditions which are fully competitive with exports of other coun-
tries, and consistent with international agreements. For the pur-
pose of the preceding sentence, rates and terms and conditions
need not be identical in all respects to those offered by foreign
countries, but should be established so that the effect of such rates,
terms, and conditions for all the Bank’s programs, including those
for small businesses and for medium-term financing, will be to neu-
tralize the effect of such foreign credit on international sales com-
petition. The Bank shall consider its average cost of money as one
factor in its determination of interest rates, where such consider-
ation does not impair the Bank’s primary function of expanding
United States exports through fully competitive financing. The
Bank may not impose a credit application fee unless (i) the fee is
competitive with the average fee charged by the Bank’s primary
foreign competitors, and (ii) the borrower or the exporter is given
the option of paying the fee at the outset of the loan or over the
life of the loan and the present value of the fee determined under
either such option is the same amount. It is also the policy of the
United States that the Bank in the exercise of its functions should
supplement and encourage, and not compete with, private capital;
that the Bank, in determining whether to provide support for a
transaction under the loan guarantee, or insurance program, or
any combination thereof, shall consider the need to involve private
capital in support of United States exports as well as the cost of
the transaction as calculated in accordance with the requirements
of the Federal Credit Reform Act of 1990; that the Bank shall ac-
cord equal opportunity to export agents and managers, independ-
ent export firms, export trading companies, and small commercial
banks in the formulation and implementation of its programs; that
the Bank should give emphasis to assisting new and small business
entrants in the agricultural export market, and shall, in coopera-
tion with other relevant Government agencies, including the Com-
modity Credit Corporation, develop a program of education to in-
crease awareness of export opportunities among small agri-
businesses and cooperatives, that loans, so far as possible consist-
ent with the carrying out of the purposes of subsection (a) of this
section, shall generally be for specific purposes, and, in the judg-
 19

ment of the Board of Directors, offer reasonable assurance of repay-

ment; and that in authorizing any loan or guarantee, the Board of
Directors shall take into account any serious adverse effect of such
loan or guarantee on the competitive positition of United States in-
dustry, the availability of materials which are in short supply in
the United States, and employment in the United States, and shall
give particular emphasis to be objective of strengthening the com-
petitive position of United States exporters and thereby of expand-
ing total United States exports. Only in cases where the President,
after consultation with the Committee on Banking and Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate, determines
that such action would be in the national interest where such ac-
tion would clearly and importantly advance United States policy in
such areas as international terrorism, nuclear proliferation, envi-
ronmental protection and human rights, should the Export-Import
Bank deny applications for credit for nonfinancial or noncommer-
cial considerations. Each such determination shall be delivered in
writing to the President of the Bank, shall state that the determina-
tion is made pursuant to this section, and shall specify the applica-
tions or categories of applications for credit which should be denied
by the Bank in furtherance of the national interest.
* * * * * * *
(I) The Chairman of the Bank shall design and implement a pro-
gram to provide information about Bank programs to companies
which have not participated in Bank programs. Not later than 1
year after the date of the enactment of this subparagraph, the
Chairman of the Bank shall submit to the Congress a report on the
activities undertaken pursuant to this subparagraph.
(J) The Board of Directors of the Bank shall prescribe such regu-
lations and the Bank shall implement such procedures as may be
appropriate to ensure that, in selecting from among firms to which
to provide financial assistance, preference be given to any firm that
has shown a commitment to reinvestment and job creation in the
United States.
* * * * * * *
(9)(A) The Board of Directors of the Bank shall take prompt meas-
ures, consistent with the credit standards otherwise required by law,
to promote the expansion of the Bank’s financial commitments in
sub-Saharan Africa under the loan, guarantee, and insurance pro-
grams of the Bank.
(B)(i) The Board of Directors shall establish and use an advisory
committee to advise the Board of Directors on the development and
implementation of policies and programs designed to support the ex-
pansion described in subparagraph (A).
(ii) The advisory committee shall make recommendations to the
Board of Directors on how the Bank can facilitate greater support
by United States commercial banks for trade with sub-Saharan Af-
rica.
(iii) The advisory committee shall terminate 4 years after the date
of the enactment of this subparagraph.
* * * * * * *
 20

SEC. 3. (a) * * *
* * * * * * *
(d)(1) * * *
(2)(A) Not less than three members appointed to the Advisory
Committee shall be representative of the small business commu-
nity.
(B) Not less than 2 members appointed to the Advisory Committee
shall be representative of the labor community.
* * * * * * *
(e)(1) No director, officer, attorney, agent, or employee of the
bank shall in any manner, directly or indirectly, participate in the
deliberation upon or the determination of any question affecting
such individual’s personal interests, or the interests of any corpora-
tion, partnership, or association in which such individual is directly
or indirectly personally interested.
(2) The General Counsel of the Bank shall ensure that the direc-
tors, officers, and employees of the Bank have available appropriate
legal counsel for advice on, and oversight of, issues relating to eth-
ics, conflicts of interest, personnel matters, and other administrative
law matters by designating an attorney to serve as Assistant Gen-
eral Counsel for Administration, whose duties, under the super-
vision of the General Counsel, shall be concerned solely or primarily
with such issues.
* * * * * * *
SEC. 7. The Export-Import Bank of the United States shall con-
tinue to exercise its functions in connection with and in further-
ance of its object and purposes until the close of business on Sep-
tember 30, ø1997¿ 2001, but the provisions of this section shall not
be construed as preventing the Bank from acquiring obligations
prior to such date which mature subsequent to such date or from
assuming prior to such date liability as guarantor, endorser, or ac-
ceptor of obligations which mature subsequent to such date, or
from issuing either prior or subsequent to such date, for purchase
by the Secretary of the Treasury or any other purchasers, its notes,
debentures, bonds, or other obligations which mature subsequent to
such date or from continuing as a corporate agency of the United
States and exercising any of its functions subsequent to such date
for purposes of orderly liquidation, including the administration of
its assets and the collection of any obligations held by the Bank.
* * * * * * *
TIED AID CREDIT PROGRAM AND FUND

SEC. 10. (a) * * *

* * * * * * *
(c) TIED AID CREDIT FUND.—
(1) * * *
(2) EXPENDITURES FROM FUND.—Amounts in the Fund shall
be available for grants made by the Bank under the tied aid
credit program established pursuant to subsection (b) and to
reimburse the Bank for the amount equal to the
 21

concessionality level of any tied aid credits authorized by the

Bank øthrough September 30, 1997¿.
* * * * * * *
(e) AUTHORIZATION.— øThere are authorized to be appropriated
to the Fund such sums as may be necessary for each of fiscal years
1996 and 1997.¿ There are authorized to be appropriated to the
Fund such sums as may be necessary to carry out the purposes of
this section. Such sums are authorized to remain avaliable until ex-
pended.
* * * * * * *

SECTION 1 OF THE ACT OF OCTOBER 31, 1994

AN ACT To authorize the Export-Import Bank of the United States to provide fi-
nancing for the export of nonlethal defense articles and defense services the pri-
mary end use of which will be for civilian purposes.
SECTION 1. AUTHORITY TO PROVIDE FINANCING FOR THE EXPORT OF
NONLETHAL DEFENSE ARTICLES OR SERVICES THE PRI-
MARY END USE OF WHICH WILL BE FOR CIVILIAN PUR-
POSES.
(a) * * *
* * * * * * *
(c) PERIOD OF EFFECTIVENESS.—The amendments made by this
section shall remain in effect during the period beginning on the
date of enactment of this Act and ending on September 30, ø1997¿
2001.
 ADDITIONAL VIEW
H.R. 1370, reauthorizing the Export-Import Bank, should be re-
jected for several reasons. The claim to constitutionality is dubious.
The Bank rewards special interest groups with political favors. Re-
allocating money from the job-producing, productive sectors of the
economy to the less efficient sectors distorts credit allocation. Reau-
thorization of the Bank is both had economics and bad politics.
Article I section 8 of the U.S. Constitution enumerates areas over
which Congress has authority. The Ninth and Tenth Amendments
further reinforce that powers not vested in the U.S. Congress are
reserved to the States or to the People. The Fifth Amendment of
the Constitution forbids the ‘‘taking’’ from the people in order to
subsidize the business of the politically well-connected. It is not
through free trade that the government subsidizes the politically
well-connected. Rather, it is through such organizations as the Ex-
Im Bank.
The U.S. government takes money from its citizens through taxes
to subsidize other nations’ purchases. Very often, our government
subsidizes the purchases by foreign governments, such as the Peo-
ple’s Republic of China or other brutal regimes, whose practices
many Americans find objectionable. In fact, according to the Ex-
port-Import Bank’s 1996 Annual Report, the People’s Republic of
China was the second largest recipient country of U.S. Ex-Im Bank
loans or loan guarantees; American taxpayers subsidized $4.1 bil-
lion of mainland China’s purchases. It is one thing to permit vol-
untary exchanges between citizens of different countries but quite
another to coerce the American taxpayer to subsidize the purchases
of a country whose practices offend many. Such practices can best
be explained by considering the way in which the Ex-Im Bank op-
erates. Maria L. Haley, one of the five Bank directors, is a long-
time ‘‘Friend of Bill’’ from Arkansas who ran then-Gov. Clinton’s
program to attract foreign investment in the state. She advocated
approval of loans to Pauline Kanchanalak (a Thai native living in
Virginia) to set up Blockbuster Video stores in Bangkok, Thailand.
The Ex-Im Bank has never approved financing for franchise rights;
retail stores abroad do not create U.S. jobs. Ms. Kanchanalak con-
tributed $85,000 on June 18, 1996, the same day DNC fundraiser
John Huang arranged for her to be invited to a White House coffee.
Mr. Huang called her that day and twice more in August. The DNC
eventually returned $250,000 of Ms. Kanchanalak’s donations be-
cause of questionable foreign origin. It is clear that the Bank some-
times acts as a slush fund to repay political favors—it is, however,
not their money to lend. It is the taxpayer’ money.
Rep. Walter Jones had a serious and thoughtful amendment that
recognized the simple fact that it is the taxpayer’s money with
which we are dealing. With a few technical perfections, the amend-
ment should be adopted by the House. Limiting the taxpayer liabil-
(22)
 23

ity is a small step that would neither eviscerate the Bank nor hurt
our ability to compete internationally. The modest amendment
merely reduces the Bank’s—and ultimately the taxpayers’—liability
by 10% of its current liability.
The act of the government taking from its people to return only
part of it (and that part with strings attached) is another sign of
the so-called ‘‘Nanny State.’’ The strings are meant to induce the
welfare or subsidy recipients to act in a manner that another group
of individuals, through the coercive power of the State, subjectively
consider desirable. A ‘‘Bully State’’ might be a better characteriza-
tion of such a government. The Frank amendment rightfully ac-
knowledges this fact and attempts to maintain some form of equal-
ity of discrimination.
The amendment by Rep. Bernard Sanders makes an effort to ad-
dress the charge that the Bank uses taxpayer dollars from both in-
dividuals and job-producing small businesses to fund large corpora-
tions that export American jobs or downsize their workforce here.
If money is to be taken from the paychecks of our citizens, then it
should at least be spent on companies showing a commitment to
reinvestment and job creation in the United States.
The supporters of the Export-Import Bank will point to the few
examples of claimed jobs created through subsidized exports of the
beneficiaries of the their programs. They will be conspicuously si-
lent on the greater number of jobs lost or forgone, dispersed
throughout the country, due to the increased tax burden levied on
the productive companies to support the lest efficient companies
living on government subsidies. The few beneficiaries of govern-
ment largesse are easier to identify than the no less real, but hard-
er to identify, losers of the government’s misguided policies.
The funding for the Export-Import Bank affords politicians the
opportunity to pay back their contributors with other people’s
money. By voting for reauthorization of the Bank, those individual
politicians that depend on the political support of the few large
companies subsidized at taxpayer expense can return the favor.
This Congress should put a stop to this special interest favoritism.
The Congressional Research Service, in a recent report, noted that
the Bank’s ‘‘subsidized export financing raised financing costs for
all borrowers by drawing on financial resources that otherwise
would be available for other uses.’’
Small businesses that are the engine of export growth and job
creation in this country subsidize the larger corporations that are
shedding jobs in America. This misallocation of credit occurs be-
cause the larger corporations have the resources to lobby politicians
in order to seek special favors that are out of reach of the small
businesses. These lobbyists will claim that these special interest
subsidies are important to the country. Yet with nearly $900 mil-
lion funding for the Bank (a part of over three billion tax dollars
spent annually on export promotion activities), only $20 billion of
our total U.S. exports of $700 billion are subsidized.
Arguments that we must reauthorize the Bank because it creates
jobs, generates economic growth, and counterbalances the subsidies
of our major trading partners is not supported by objective eco-
nomic data:
 24
[In percent]

Country’s ex-
Country ports sub- Rate of real Rate of unem-
sidized 1 GDP growth 2 ployment 2

Japan ..................................................................................................................... 32 0.7 3.1

France .................................................................................................................... 18 2.2 11.6
Canada .................................................................................................................. 7 2.2 9.5
Germany ................................................................................................................. 5 2.1 9.4
Italy ........................................................................................................................ 4 3.0 12
U.K ......................................................................................................................... 3 2.4 8.2
U.S.A. ..................................................................................................................... 2 2.0 5.6
Source: 1 Export-Import Bank, 1995 figures; 2 Bureau of Economic and Business Affairs, 1995 figures).

It would be difficult for anyone but the most committed statists

to argue that the dirigiste wonders of government bureaucrats
could be demonstrated by macroeconomic statistics. However, if
there is a broad relationship, it is directly inverse to the relation-
ship the central planners envision.
In 1995, according to Export-Import Bank data, Japan subsidized
32% of its exports and France subsidized 18% while the United
States only aided 2% of total exports. However in the same year,
according to figures from the Bureau of Economic and Business Af-
fairs, Japan’s real growth in Gross Domestic Product registered a
paultry 0.7% against a solid 2.0% here in the U.S. and France had
an unemployment rate of 11.6%, more than double the American
rate of only 5.6%. Perhaps, following the logic of the Bank’s sup-
porters, we should increase the portion of our subsidized exports to
nine times the current level (with the accompanying tax increases)
to double our unemployment rate, and, if that isn’t desirable, we
could double that rate of subsidy (again with the increased tax bur-
den) to cut our economic growth rate to one-third its current level.
We should not jump off the bridge of special interest corporativism
just because our competitors do.
‘‘Corporate welfare does not work anywhere in the world. It does
not work because it penalizes a country’s winners with excess taxes
in order to fund that country’s losers with inefficiently run govern-
ment programs,’’ testified Dr. T.J. Rodgers, President and C.E.O. of
Cypress Semiconductor Corporation, before Congress in 1995.
‘‘ ‘They’ve got subsidies, we need subsidies,’ is exactly wrong. Amer-
ica will be much more competitive on a relative basis if we allow
the nations with whom we compete to squander their taxpayers’
money, while we encourage our companies to win without sub-
sidies. It’s like the Olympics: there comes the day when an athlete
must walk alone into the area of competition. The government can-
not lift the weights and run the miles that are required to be a
champion—only an individual can.’’
RON PAUL.
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 ADDITIONAL VIEWS OF HON. DOUG BEREUTER
I am pleased that the House Banking Committee overwhelmingly
approved legislation extending the authorization of the Export-Im-
port Bank (Ex-Im) into the next millennium. I am also pleased that
the Committee included two provisions which I authored.
The first extends current law which allows Ex-Im participation
in financing of defense articles which have civilian uses, provided
there is appropriate end-use monitoring to ensure that they are
truly used for civilian, non-military uses.
I am also pleased that the Committee accepted an amendment
I offered in Sub-committee which requires the President to report
to the House and Senate Banking Committees before rejecting fi-
nancing applications based on ‘‘the Chafee amendment.’’
However, there is one provision the Committee approved which
I believe will prove to be problematic if enacted. Specifically, the
Committee approved an amendment which will require Ex-Im to
give preference to firms that have shown a commitment to job cre-
ation and reinvestment in the United States through Ex-Im pre-
scribed regulations and procedures. Although noble sounding, this
provision changes Ex-Im’s role from determining how many jobs a
particular project would support to considering the commitment a
corporation makes to supporting employment in the U.S. versus
other countries in all areas of their corporate operations.
Requiring Ex-Im to give preference to any firm that has shown
a commitment to reinvestment and job creation in the U.S. shows
a misreading of what Ex-Im does best and a misunderstanding of
its procedures. Ex-Im does not choose between exporters. It evalu-
ates buyers on the basis of credit worthiness. It also applies envi-
ronmental guidelines to some transactions.
Ex-Im Bank does not select from among firms and choose to give
assistance to one firm over another. Ex-Im’s primary job is to judge
the credit worthiness of buyers, not exporters. This is in fulfillment
of Ex-Im’s Congressional mandate to find a reasonable assurance
of repayment on every transaction and thus protect the taxpayer’s
investment in Ex-Im. Confusion in this mandate will put taxpayer
money at risk.
Ex-Im responds to market signals, not the policies of exporters.
The more confusing mandates are placed upon Ex-Im, the more Ex-
Im risks becoming unfocused in its policies. It is also probable that
such directives will slow the Bank’s response time and thus risk
the timely response necessary to win export contracts for American
firms.
This amendment also raises the possibility that the ‘‘firms’’ re-
ferred to could apply to banks providing the loans which Ex-Im
Bank guarantees. If this proves to be the case, it is unclear wheth-
er foreign banks or foreign branches of U.S. banks would still be
eligible to receive Ex-Im Bank’s guarantee. This would contravene
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Ex-Im Bank’s charter, specifically section 2(b)(1)(G), that non-U.S.

persons cannot be discriminated against in seeking access to Bank
programs. Since Ex-Im Bank makes frequent use of foreign banks
as guaranteed lenders, this would imperil much of Ex-Im’s guaran-
tee program and would also greatly hamper Ex-Im’s very effective
Project Finance program, which also makes frequent use of foreign
banks.
Since the wording of the amendment is broad and vague, it po-
tentially opens Ex-Im to litigation, especially from companies who
may feel that they should have been given a ‘‘preference’’ over
other companies. This means the use of taxpayer dollars to defend
Ex-Im against lawsuits, instead of using those dollars to process
the export transactions that sustain and increase U.S. jobs.
DOUG BEREUTER.
 ADDITIONAL VIEWS OF HON. KENNETH E. BENTSEN, JR.
As an original co-sponsor of H.R. 1370, legislation to reauthorize
the Export-Import Bank (EXIMBank) of the United States, I am
pleased to support this important legislation that will ensure our
ability to compete abroad.
The EXIMBank has proven to be effective in selling American
products. Over the last five years, the EXIMBank has helped to sell
more than $75 billion in US exports to the world. In our global
economy, this investment is critically important to improving our
economy and improving our balance of trade. In addition, these
sales ensure that American companies continue to grow and pros-
per. When we sell American-made products abroad, we make our
companies more competitive and we ensure that American workers
keep their jobs.
In Texas, the impact of these exports on our economy is signifi-
cant. In my district, Ex-Im financing is felt in the petrochemical in-
dustry as it exports abroad. Texas companies sell the second high-
est level of exports in our nation. the EXIMBank helps to ensure
that our state will continue to sell more Texas-made products.
I strongly believe that EXIMBank is good investment that is fis-
cally responsible. EXIMBank and its programs only go to projects
where the private insurance and finance sector will not go, in order
that we may sell U.S. products in the most challenging markets.
The EXIMBank assistance program is targeted to only those in-
vestments where our private capital markets have failed to serve.
Further, there is no empirical evidence that EXIMBank results in
a transfer of capital and economic activity abroad in and of itself.
For every $1 dollar spent on EXIMBank, American companies are
able to leverage $20 dollars in private capital to build new markets
and promote American products. Another added benefit of this pro-
gram is that when EXIMBank invests in a project, other private
capital become available. This, in fact, could be viewed as capital
formation.
Some have labeled this program to be corporate welfare, others
have argued that it is inefficient. In a perfect world, perhaps that
would be true, but we do not live in a perfect world. Under classical
economics, it might be argued that we should eliminate this pro-
gram. While our trading partners will continue to heavily subsidize
export finance, U.S. companies would be at a competitive disadvan-
tage and would be unable to seek contracts abroad. In name of
philosophical purity, we would be no more successful than that of
mercantilism in the eighteenth century.
If the United States did not invest in the EXIMBank, we would
be hurting our own economy. Other nations aggressively promote
the sale of their products through extensive export assistance pro-
grams. In some cases, these countries spend up to 40 percent of
their export assistance on promoting the sale of domestically-made
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products. Our nation invests a much smaller amount, up to 3 per-

cent, for those projects where the private sector is not and will not
be involved. I believe this targeted investment is appropriate and
ensures that our investment is narrowly tailored to those projects
which the private sector no longer serves.
I am a strong supporter of this legislation and will work to en-
sure its passage this year.
KENNETH E. BENTSEN.
 SUPPLEMENTAL VIEWS OF HON. BERNIE SANDERS
Preference for companies that show a commitment to reinvestment
and job creation in the United States
I am very pleased that the Committee approved an amendment
that directs the Export-Import Bank (Ex-Im) to establish proce-
dures to ensure that, when selecting among firms to provide finan-
cial assistance, preference is given to any firm which has shown a
commitment to reinvestment and job creation in the United States.
Because the purpose of Ex-Im is to support U.S. jobs through ex-
ports, the Bank should give preference to U.S. corporations which
reinvest and support jobs in the United States, as opposed to cor-
porations which are laying off American workers only to locate pro-
duction and other facilities in countries which have less expensive,
unprotected workforces.
This amendment gets at the heart of the issue of the relationship
between the U.S. government, the taxpayers of this country and
corporate America. A number of Federal programs are being criti-
cized, inside and outside Congress, as ‘‘corporate welfare’’ and these
programs are being targeted for spending cuts by people with wide-
ly different political philosophies. The Export-Import Bank is one
of those programs.
The Journal of Commerce reported on June 12, 1997, that Ex-Im,
like the rest of the country, is presently facing a money crunch.
The journal reports that Ex-Im: ‘‘faced with strong exporter de-
mand, may run out of money this fiscal year as early as July, offi-
cials indicate. Next year, the money squeeze could be worse.’’ It
seems clear that it is time for the Export-Import Bank to prioritize;
this money squeeze should indicate to us that there is actually a
need for a system of priorities, such as that in this amendment, to
ensure that companies which are the most committed to jobs in the
U.S. are given preference over companies that are not.
It is becoming too common for U.S. corporations, including cor-
porations which are supported by Ex-Im, to downsize their U.S.
workforce and move their production facilities to take advantage of
cheap labor in other countries. According to information from Ex-
Im, among the top 25 companies which receive assistance from Ex-
Im are Boeing, General Electric, and AT&T. A brief look at the em-
ployment practices of these corporations underscores the need for
an amendment which gives preference to corporations that show a
commitment to employment in the U.S.
Boeing is the top recipient of Ex-Im loans and guarantees. Re-
ports indicate that in 1990 Boeing had 155,900 employees. In 1996,
it had 103,600 employees—a decline of 52,300 jobs during that pe-
riod. In other words, it laid off 1⁄3 of its workforce, despite being
the top recipient of Ex-Im aid.
General Electric (GE) is listed as the number two recipient of Ex-
Im aid. In 1975 GE had 667,000 American workers. Twenty years
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later, it had 398,000, a decline of 269,000 jobs. General Electric is

well known for its policies of moving GE jobs to anyplace in the
world where it can get cheap labor—Mexico, China and other poor
Third World countries.
As for AT&T, in 1995 AT&T laid off 40,000 workers. Interest-
ingly enough, reports show that in that same year, AT&T provided
its CEO, Robert Allen, with $15 million in options plus a $11 mil-
lion grant.
The point here is that the entire approach of Ex-Im in terms of
job creation is too narrow. They approach the idea of ‘‘jobs through
exports’’ on a project-by-project basis, and ignore the totality of
what the company is doing. This amendment, on the other hand,
expands Ex-Im’s focus when making the determination as to how
many jobs a transaction will support. This amendment directs the
Export-Import Bank to look at the totality of the situation regard-
ing a company’s commitment to job creation in the United States,
and not just a particular project. In other words, if there is a com-
pany that is showing a commitment to job creation and reinvest-
ment in the United States, then that company should receive pref-
erence for assistance.
At a time when the Congress is working very hard to balance the
budget, it seems only right that if U.S. taxpayer funds are to be
used to support U.S. corporations’ exports, then incentive and pri-
ority must be given to those corporations to reinvest and support
jobs in the United States. A preference system, as provided by this
amendment, would provide such an incentive to corporations, while
at the same time, allowing the Bank some discretion in implemen-
tation, to ensure that both the purpose of the Bank and this
amendment are fulfilled.
Two representatives from the labor community on the Advisory
Board of the Export-Import Bank
The Committee also approved an amendment which directs the
Export-Import Bank to include upon its Advisory Committee no
less than two representatives from the labor community. It is my
expectation that these positions would be filled by representatives
of the AFL–CIO.
Because the purpose of the Export-Import Bank is to support
U.S. jobs through exports, it is important to have two members
representing the American workforce on the Advisory Committee to
ensure that the influence of the Advisory Committee is more evenly
balanced for the sake of U.S. workers.
BERNIE SANDERS.